Is there such thing as a Personal Real Estate Corporation or a Real Estate Professional Corporation in Ontario?

Simply put, the answer is “No”. Unlike other provinces, such as British Columbia, in Ontario Real Estates Salespersons or Brokers cannot self-incorporate as a Realtor and enjoy some of the income tax benefits that an incorporated active business can in Ontario. The only allowed corporate entities in the Ontario real estate profession are the brokerages themselves. The benefit of a professional corporation that is available to lawyers, doctors, dentists and accountants to name a few, is that these professionals can provide their services through their professional corporation thus directing all revenues to this entity and writing off all of the matched expenses they incur in the process. This will allow them to better manage their income, as well as higher other individuals such as their spouse and or children to help – thereby affording them a salary as well. Essentially then, the professional is able to reduce their what would have been personal income by writing off expenses they otherwise could not. As well as reasonably split their income with family members who are most likely taxed at lower marginal rates as they may have no other sources of income. Furthermore, money that is not necessary for personal use during the calender year can be kept in the corporation. This would then be taxed at the low corporate tax rates for active businesses. In Ontario the combined federal and provincial corporate tax rate on the first $500,000 of active business income is only 15.50%, and then 26.50% for every dollar thereafter. Thus, if the professional is not drawing all of the corporate net income by way of a salary or as a fee for service through an independent contractor arrangement, the balance will remain in the company and taxed at much lower rates. This will effectively free up cash flow within the company to invest in other things such as expanding the business itself or investing in passive income generating instruments or assets such as real estate. There are some rules that limit the business activities to only that of the profession or anything ancillary thereto, but there is usually an allowance to invest in passive income generating instruments and assets with the excess cash flow. However, no professional corporation or personal real estate corporation in Canada allows for a professional to absolve themselves from professional negligence, carelessness, errors or omissions. Unlike regular corporations, professionals remain responsible for their errors and omissions while providing professional services. However, for anything else, such as corporate loans, debts, or contractual obligations, the professionals as shareholders will enjoy the same limited liability as in any other corporation (so long as they do not personally guarantee the loan, debt or contractual obligation).

Jeff Levy is the managing partner at Levy Zavet PC, Lawyers. Mr. Levy is an experienced Ontario-based lawyer practicing primarily in the areas of real estate, mortgages, corporate law, corporate finance, mergers and acquisitions, joint ventures, tax law, commercial finance and estate planning. His primary role is serving as a trusted adviser to businesses of all sizes including corporations and family-owned or private businesses. Mr. Levy has represented companies doing business in many different areas including mortgage investment corporations (MICs), mortgage funds, mortgage brokerages and administrators, professional corporation, land development, condominiums, software development, construction, intellectual property, trademarks, patents, retailing, distribution, manufacturing, banking, consulting and other professional service fields.
Mr. Levy’s experience includes advising start-ups seeking guidance on how to structure their businesses, counseling established companies looking for new sources of capital to fuel their growth, and assisting mature family-owned companies planning for transfer of the business to the next generation. His experience and training in business law also provide him with the background to counsel his clients on private equity transactions, venture capital and financing issues; joint ventures and strategic business relationships; software development contracts, licensing agreements and other technology issues; sales and distribution matters; and employment issues and executive compensation arrangements. He also provides advice on buying a business for those starting out or expanding their existing operations and counsels others on selling their business or exit strategies.
In addition to his regular corporate and business law experience, Jeff Levy also brings more than six years of experience to his real estate law practice. He has represented clients ranging from first time home buyers to condominium developers in the areas of residential and commercial closings, land development and assembly, condominium development, condo corporations and the condo act, Tarion Home Warranty claims, Title Insurance claims, and more. Jeff Levy greatly enjoys advising and counseling on mortgages and mortgage transactions. Everything from setting up and ongoing compliance with Mortgage Investment Corporations (MICs), mortgage brokerages, mortgage administrators, mortgage syndication, private mortgages and complex deal structuring. Jeff Levy is extremely experienced in drafting complicated mortgage loan agreements and structuring multi-collateral, diverse payments and elaborate recovery provisions in every unique situation. His long history of experience in mortgage enforcement, power of sale, and foreclosures, has given him the knowledge to foretell viable exit strategies at the loan origination stage of almost every single mortgage deal.
Jeff Levy also has significant experience in protecting intellectual property rights, and has extensive knowledge of laws related to trademarks, copyrights, know-how and trade secrets, through combinations of registrations, contractual restrictions and licensing agreements..

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